LONDON (Alliance News) - Paddy Power Betfair PLC on Wednesday said its profit grew slightly in the first half of 2018, but the bookmaker lowered its earnings expectations due to uncertainty over Australian tax reforms and its FanDuel acquisition.
The FTSE 100-listed betting company reported a pretax profit of GBP106 million for the six months to the end of June, up 4% from GBP102.3 million the year before. Underlying pretax profit dropped, however, to GBP172.2 million compared to GBP177.6 million.
Meanwhile, revenue grew to GBP866.7 million, up 4.8% from GBP827.0 million the year prior, with revenue in sports rising by 12%, gaming up by 14%, and online revenue increasing by 13%. On a constant currency basis, group revenue grew by 7%.
The company posted a 2% decline in revenue in the first quarter of 2018, adversely affected by reduced customer activity in the UK & Ireland.
However, this was offset by 12% revenue growth in the second quarter of 2018, boosted by the football World Cup. Revenue from the tournament totalled GBP23 million in June.
Paddy Power reported underlying earnings before interest, tax, depreciation and amortisation at GBP217.0 million, down 1.4% from GBP220.0 million the same period a year earlier. Excluding changes in betting taxes and levies, Ebitda rose by 6%.
Looking forward, the company said it now expects Ebitda for the full-year to come in between GBP460 million and GBP480 million, due to the the introduction of additional taxes in Australia and losses from the FanDuel daily fantasy sports business. In 2017, underlying Ebitda was GBP473 million.
Back in May, the company guided underlying Ebitda for the full-year to be between GBP470 million and GBP495 million.
In recent months, the Australian government has confirmed plans to introducing point of consumption taxes, with the overall impact for Paddy Power being an additional cost equivalent to 13% of revenue from 2019.
In May, the company agreed to combine its US assets with fantasy sports operator FanDuel. Following the transaction completion in July, Paddy Power owns 61% of the combined business.
Although not included in the reported first half results, the company said FanDuel revenue increased by 4% year-on-year and it generated a small Ebitda loss in the period.
The company has proposed an interim dividend of 67 pence per share, up 3% from 65p paid the year before.
"It has been a busy and successful few months for Paddy Power Betfair," said Chief Executive Peter Jackson.
"We have made substantial progress against our strategic priorities and trading in the second quarter was good, with all brands and operating divisions contributing to the group's double-digit revenue growth."
Shares in Paddy Power were trading 1.5% lower early on Wednesday at 8,000.00p each, making it the worst performer in the FTSE 100 index.
